Just One More Case … If you’ve ever seen the show “Deal or No Deal” you’ve likely noticed how common it is for contestants to be lured into taking additional risks to see if they can get through just one more case and keep their dream of big money alive. Sometimes it works out for them and they win big.
However, more times than not, the contestant pushes the envelope too far and ends up squandering a sure thing in the hopes of obtaining that alluring million-dollar prize. We have seen the same thing happen in the mortgage industry lately as clients continue to risk a sure thing in the hopes of saving $160 a month instead of the guaranteed $150 savings that is right in front of them. This desire to catch the market at its absolute lowest point and save that extra $10 a month can backfire and costs them thousands of dollars in potential savings. The truth is that none of us know “what case will be opened up next” and betting on the future can be a bit of a risky proposition considering the turbulent climate that surrounds us.
The reason I bring this is up is because my greatest fear is that you will miss out on the current opportunity that is before us. The turmoil in the economy has created a situation where we can likely reduce your monthly mortgage payment. To find out exactly how the numbers pencil out for you give me a call at 860 829-9600 x101. Reviewing your options and knowing what your specific situation looks like will help you make the best possible decision to help you and your family.
Sunday, March 8, 2009
Tuesday, February 17, 2009
New Stimulus Signed into Law by Obama
Here is a great summary of what the new Stimulus means to first time buyers.
Stimulus Plan First-Time Homebuyer Tax Credit. The Stimulus Plan was signed into law by President Obama today. It contains a new tax credit for first-time homebuyers. Essentially, first-time homebuyers within certain income limits who purchase a home in 2009 before December 1, 2009 will receive a tax credit of up to $8,000.
The program is similar to the $7,500 tax credit which applied to home purchases made in 2008 after April 9. A comparison of the two credit programs is outlined below. While the Stimulus Plan was still being debated, the Senate version originally included a $15,000 tax credit for all homebuyers. To lower the cost of the Stimulus Plan, the final version of the Plan contained this smaller tax credit, and this tax credit is applicable only to first-time homebuyers.
To qualify as a first-time home buyer as defined in the programs, the purchaser (and the purchaser's spouse) may not have owned a home in the three years prior to the purchase date of the home. Single family homes qualify for the program. The home must be the primary residence.Both tax credits are subject to the same adjusted gross income limitations (full credit for AGI less than $75,000 single/$150,000 joint, phased out for AGI up to $95,000 single/ $170,000 joint). The amount for either credit is the lesser of 10% of the home purchase price or $7,500 or $8,000, as applicable.
While a purchaser still owns the home, the $7,500 credit must be repaid in equal payments over a period of 15 years, starting with the 2010 tax filing. The $8,000 credit will not need to be repaid. Again, the $7,500 credit needs to be repaid, while the $8,000 credit does not! Upon sale of the home, any portion of the $7,500 credit not yet repaid is due in full. No portion of the $8,000 credit is due upon sale of the home, if the home is owned for more than three years. If the home is sold within the first three years, the full amount of the credit is due upon sale. The $7,500 credit was not available to any purchaser utilizing state/local revenue bond money to help finance the home purchase. There is no such restriction on the $8,000 credit. Under both the $7,500 and the $8,000 programs, the credit will be claimed on the purchaser's income taxes. Any amount in excess of taxes owed will be refunded to the purchaser. Additional information about the tax credit can be found on the websites of the National Association of Realtors (www.realtor.org) and the National Association of Home Builders (www.nahb.org).
$8000 free to buy a new home! It's time to let your friends, family and co-workers know the great news!
Stimulus Plan First-Time Homebuyer Tax Credit. The Stimulus Plan was signed into law by President Obama today. It contains a new tax credit for first-time homebuyers. Essentially, first-time homebuyers within certain income limits who purchase a home in 2009 before December 1, 2009 will receive a tax credit of up to $8,000.
The program is similar to the $7,500 tax credit which applied to home purchases made in 2008 after April 9. A comparison of the two credit programs is outlined below. While the Stimulus Plan was still being debated, the Senate version originally included a $15,000 tax credit for all homebuyers. To lower the cost of the Stimulus Plan, the final version of the Plan contained this smaller tax credit, and this tax credit is applicable only to first-time homebuyers.
To qualify as a first-time home buyer as defined in the programs, the purchaser (and the purchaser's spouse) may not have owned a home in the three years prior to the purchase date of the home. Single family homes qualify for the program. The home must be the primary residence.Both tax credits are subject to the same adjusted gross income limitations (full credit for AGI less than $75,000 single/$150,000 joint, phased out for AGI up to $95,000 single/ $170,000 joint). The amount for either credit is the lesser of 10% of the home purchase price or $7,500 or $8,000, as applicable.
While a purchaser still owns the home, the $7,500 credit must be repaid in equal payments over a period of 15 years, starting with the 2010 tax filing. The $8,000 credit will not need to be repaid. Again, the $7,500 credit needs to be repaid, while the $8,000 credit does not! Upon sale of the home, any portion of the $7,500 credit not yet repaid is due in full. No portion of the $8,000 credit is due upon sale of the home, if the home is owned for more than three years. If the home is sold within the first three years, the full amount of the credit is due upon sale. The $7,500 credit was not available to any purchaser utilizing state/local revenue bond money to help finance the home purchase. There is no such restriction on the $8,000 credit. Under both the $7,500 and the $8,000 programs, the credit will be claimed on the purchaser's income taxes. Any amount in excess of taxes owed will be refunded to the purchaser. Additional information about the tax credit can be found on the websites of the National Association of Realtors (www.realtor.org) and the National Association of Home Builders (www.nahb.org).
$8000 free to buy a new home! It's time to let your friends, family and co-workers know the great news!
Thursday, January 29, 2009
Mortgage commentary from Mortgage News Daily website
Great commentary I saw today regarding interest rates and why they are where they are.
Thanks to Mortgage News Daily
Fed done. Nothing new, no unexpected events. The advancement of President Obama's Stimulus Plan and the possibility that a "Bad Bank" will be created to buy up toxic mortgage assets is encouraging for equity markets, but the feelings wont Be mutual for the TSY market. Increased issuances of gov. debt will drive up longer maturity yields and the TSY curve will steepen in the sell off. The Fed's continued involvement in the MBS market will provide stability and assist in the tightening of MBS/TSY spreads as Gov.notes and bond yields rise. Just remember that ALL markets are a day trader's delight right now and buying the dips and selling the rips is a popular trading strategy. In the mortgage origination world I would equate this to doing a ton of units with tight profit margins...in the long run you work harder but make a decent living.
I am feeling more encouraged about the prospects for tighter primary/secondary spreads. If you are a new reader I am referring to the difference between what rate borrowers are offered compared to how the MBS stack is behaving. On Tuesday and Wednesday we observed increased lock desk activity which led us to believe that an originator hedge was on the horizon (they lock their loans just like you do). Part of the reason for yesterday's early afternoon reprice alerts was this mortgage banker pipeline protection activity. Anyway what excites us this morning is the fact that the enlarged originator offering was concentrated in lower coupons like 4.0s and 4.5s. So while this could be attributed to less lock activity over the past 10 days...it could also mean that mortgage banks are starting to submit to the secondary markets requests for lower coupon production. Either way it is a positive for us and barring any TAPE BOMBS the road to reduced rates is slowly being paved. To respond to one readers comments....the light at the end of the tunnel doesn't seem to be a train heading our way! In regards to timing all we can do is keep our ears to the ground and listen to the whispers from lending ops centers.
Going back to the day trading environment. Yesterday the Fed re-iterated that "credit conditions for households and firms remain extremely tight" and we know that Bernanke's goal is to "facilitate the extension of credit to households and small businesses" ....the Fed will do this "facilitating" by keeping interest rates low. They will do so by purchasing moderating the Fed Funds rate, purchasing TSY debt, and providing a stable down in coupon bid in the MBS market. Anytime the MBS stack looks relatively weak it is an opportunity to buy on the "cheapness". Once those positions become relatively expensive...profit taking will occur and the Fed will step in to support us...and a cycle ensues.
The extent to which our rates get worse or better is a function of two factors. The first is how much the Fed buys (hopefully still in 4.0s and 4.5s) and the second is prepayment expectations. The latter is dependent on our lenders ability to pass along gains and borrower's feeling like they are finally getting the rates for which they have been patiently waiting. This price function has two dependant unknowns so making an assumption of when to expect lower mortgage rates will involve a great deal of variables. We do however appreciate the regular updates from our readers on the progression of the operational "beefing up" process.
Want more free info? Check out www.FindCTMortgage.com
Thanks to Mortgage News Daily
Fed done. Nothing new, no unexpected events. The advancement of President Obama's Stimulus Plan and the possibility that a "Bad Bank" will be created to buy up toxic mortgage assets is encouraging for equity markets, but the feelings wont Be mutual for the TSY market. Increased issuances of gov. debt will drive up longer maturity yields and the TSY curve will steepen in the sell off. The Fed's continued involvement in the MBS market will provide stability and assist in the tightening of MBS/TSY spreads as Gov.notes and bond yields rise. Just remember that ALL markets are a day trader's delight right now and buying the dips and selling the rips is a popular trading strategy. In the mortgage origination world I would equate this to doing a ton of units with tight profit margins...in the long run you work harder but make a decent living.
I am feeling more encouraged about the prospects for tighter primary/secondary spreads. If you are a new reader I am referring to the difference between what rate borrowers are offered compared to how the MBS stack is behaving. On Tuesday and Wednesday we observed increased lock desk activity which led us to believe that an originator hedge was on the horizon (they lock their loans just like you do). Part of the reason for yesterday's early afternoon reprice alerts was this mortgage banker pipeline protection activity. Anyway what excites us this morning is the fact that the enlarged originator offering was concentrated in lower coupons like 4.0s and 4.5s. So while this could be attributed to less lock activity over the past 10 days...it could also mean that mortgage banks are starting to submit to the secondary markets requests for lower coupon production. Either way it is a positive for us and barring any TAPE BOMBS the road to reduced rates is slowly being paved. To respond to one readers comments....the light at the end of the tunnel doesn't seem to be a train heading our way! In regards to timing all we can do is keep our ears to the ground and listen to the whispers from lending ops centers.
Going back to the day trading environment. Yesterday the Fed re-iterated that "credit conditions for households and firms remain extremely tight" and we know that Bernanke's goal is to "facilitate the extension of credit to households and small businesses" ....the Fed will do this "facilitating" by keeping interest rates low. They will do so by purchasing moderating the Fed Funds rate, purchasing TSY debt, and providing a stable down in coupon bid in the MBS market. Anytime the MBS stack looks relatively weak it is an opportunity to buy on the "cheapness". Once those positions become relatively expensive...profit taking will occur and the Fed will step in to support us...and a cycle ensues.
The extent to which our rates get worse or better is a function of two factors. The first is how much the Fed buys (hopefully still in 4.0s and 4.5s) and the second is prepayment expectations. The latter is dependent on our lenders ability to pass along gains and borrower's feeling like they are finally getting the rates for which they have been patiently waiting. This price function has two dependant unknowns so making an assumption of when to expect lower mortgage rates will involve a great deal of variables. We do however appreciate the regular updates from our readers on the progression of the operational "beefing up" process.
Want more free info? Check out www.FindCTMortgage.com
Tuesday, January 20, 2009
New Loan Pricing Adjustments Will Effect Many
I saw this on the Wall Street Journal -
Fannie, Freddie Strive to Serve Housing Market, Taxpayers "Fannie and Freddie over the past 18 months have gradually imposed larger surcharges on mortgage rates or fees for borrowers deemed high-risk. Real-estate brokers and home builders -- traditionally backers of Fannie and Freddie -- are up in arms. "It's appalling," Jerry Howard, chief executive of the National Association of Home Builders, said in an interview. "They're kicking people with relatively high credit scores out of the queue" for buying or refinancing homes."
"For a growing number of loans, Fannie and Freddie reduce the price they will pay (through a "loan level price adjustment") to compensate for what they see as higher risk characteristics. For instance, on a home-purchase loan involving a 20% cash down payment, a borrower with an excellent credit score of 740 or above could get a rate of about 4.75% with a 1% origination fee, said Lou Barnes, a mortgage banker in Boulder, Colo. But a borrower with a score below 680 would pay an additional fee of 2.5% of the loan amount or else accept a sharply higher interest rate."
"Fannie and Freddie had such surcharges in the past, but they were much smaller and affected a narrower range of borrowers."
"Burned by heavy losses in 2008, Fannie and Freddie have reverted to a focus on prime-quality borrowers with enough cash for sizable down payments. That has left a growing share of the market to loans insured by the Federal Housing Administration, which accepts borrowers with low credit scores and down payments of as little as 3.5%. While Fannie and Freddie now are criticized for being too strict in their credit standards, many critics fear the FHA is too lax and may face heavy losses eventually."
Fannie, Freddie Strive to Serve Housing Market, Taxpayers "Fannie and Freddie over the past 18 months have gradually imposed larger surcharges on mortgage rates or fees for borrowers deemed high-risk. Real-estate brokers and home builders -- traditionally backers of Fannie and Freddie -- are up in arms. "It's appalling," Jerry Howard, chief executive of the National Association of Home Builders, said in an interview. "They're kicking people with relatively high credit scores out of the queue" for buying or refinancing homes."
"For a growing number of loans, Fannie and Freddie reduce the price they will pay (through a "loan level price adjustment") to compensate for what they see as higher risk characteristics. For instance, on a home-purchase loan involving a 20% cash down payment, a borrower with an excellent credit score of 740 or above could get a rate of about 4.75% with a 1% origination fee, said Lou Barnes, a mortgage banker in Boulder, Colo. But a borrower with a score below 680 would pay an additional fee of 2.5% of the loan amount or else accept a sharply higher interest rate."
"Fannie and Freddie had such surcharges in the past, but they were much smaller and affected a narrower range of borrowers."
"Burned by heavy losses in 2008, Fannie and Freddie have reverted to a focus on prime-quality borrowers with enough cash for sizable down payments. That has left a growing share of the market to loans insured by the Federal Housing Administration, which accepts borrowers with low credit scores and down payments of as little as 3.5%. While Fannie and Freddie now are criticized for being too strict in their credit standards, many critics fear the FHA is too lax and may face heavy losses eventually."
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